Issues > Living Wage

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Living Wage

“We are constantly at the point of fainting. We are tired and we are weak. It takes only a few small things to make us faint.”

-Garment worker in CambodiaFrom a Labour Behind the Label report

All workers should earn enough to support themselves and their families. But many workers in different countries and industries earn wages so low they cannot pay for the basic needs of their families and often must sacrifice their own health. Factory workers in Cambodia consume just half of the recommended amount of calories and one-third of the workers are medically underweight. In Haiti, factories have long paid less than the legal minimum wage; three-quarters of Haitian garment workers don’t make enough to afford three full meals a day. Similarly, most workers in Central American maquila factories cannot meet their nutritional needs.

Most of these workers do not stand on the first rung of economic development with the prospect of better times ahead. In fact, between 2001 and 2011, garment workers' real wages decreased in most countries. The gap between workers’ wages and the cost of their basic needs is growing, not shrinking.

The lack of a living wage is inextricably linked to other workplace abuses and labor rights violations. Many workers must work long hours to earn overtime or bonuses and cannot risk taking time off when they are sick. They go to work in unsafe buildings because they cannot afford to stay away. They go to work at a young age, pretending to be of legal age, because their parents cannot afford the cost of caring for their families. At the same time, workers are afraid to fight for better wages, because they might lose their jobs if they demand their rights or join a union.

A living wage provides families with a decent standard of living. But governments often set the legal minimum wage below the subsistence level to attract foreign investment.

What is a living wage?

A living wage is a family concept—it must support a family, not just a worker.

A living wage provides for basic needs (food, shelter, clothing, healthcare), and more than that: education, childcare, and transportation.

A living wage provides discretionary income and savings.

A living wage must be earned during normal working hours (not overtime).

A living wage is the take-home pay or net wage.

A living wage excludes bonuses and all non-basic payments that are not guaranteed to all workers.

Government authorities use a variety of means—ranging from bureaucratic maneuvers and policies to the use of force and the criminalization of worker organizing and advocacy—to attract foreign investors with cheap labor.

Governments set legal minimum wages below the official poverty line and below the subsistence level. They fail to adjust the wage rate to inflation to maintain workers’ purchasing power. They fail to enforce minimum wage policies, depriving workers of their legal entitlements. They encourage informal and precarious labor practices that further erode workers’ access to legally mandated monetary and social benefits.

At the same time, governments sometimes meet workers’ wage protests with force and brutality. In Bangladesh and Cambodia, for example, tens of thousands of workers have taken to the streets to demand higher wages, only to be met by police swinging batons and even firing live ammunition, while labor leaders have faced false criminal charges of instigating violence and riots.

Often the large buyers—western retailers and brands—are the hidden forces behind government crackdowns on protesting workers and low minimum wage levels. They demand low prices and quick deliveries from factories. Low prices can mean no money to pay workers living wages or invest in safe and decent working conditions. Quick delivery demands result in production peaks that may require subcontracting to facilities that operate with small margins and without government oversight.

A living wage is a human right.

According to Article 23(3) of the United Nations Universal Declaration of Human Rights: “Everyone who works has the right to just and favorable remuneration ensuring for himself (sic) and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.”

The International Labor Organization (ILO) recommends: “Minimum wage fixing should constitute one element in a policy designed to overcome poverty and to ensure the needs of all workers and their families.”

Governments everywhere are responsible for protecting workers’ right to a living wage.

Workers in the lead

The realization to the right to a living wage is inextricably linked to the realization of the right to organize and collectively bargain. ILRF believes that:

Workers must be at the forefront of any movement to demand better wages.

Workers can establish living wages through collective bargaining or through social movements aimed at increasing the national minimum wage.

Unions should be empowered with basic needs studies and living wage methodologies to use in collective bargaining, and workers should have knowledge and tools needed for effective campaigning to increase minimum wages.

Corporate responsibilities

Companies that source production on low-wage countries are responsible for remedying the harm caused by insufficient wages and to prevent continued harm. Companies should:

Make a binding and legally enforceable commitment to a living wage.

Adopt time-bound benchmarks towards a living wage.

Make concomitant enforceable commitments to freedom of association and the right to collective bargaining, and help to foster a political environment where the right to organize and collective bargaining is observed.

Build worker capacity by investing in local worker-based groups to conduct basic needs research and create living wage methodologies.

Track and report on wage payments in factories worldwide.

Adjust their purchasing practices to create the economic conditions necessary for factories to pay a living wage. That means they should:

o Increase the labor cost of the FOB price and negotiate price increases with their supplier that allows the supplier to cover the added costs.

o Consolidate production in factories or collaborate with other buyers to ensure factories sell all or most of their products to buyers that pay for a living wage/

o Create positive incentives for factories that pay a living wage, including long-term and steady orders.

Role of international institutions

International institutions should:

Establish the international legitimacy of a living wage as a right and promote living wage guidelines.

Include the guidelines in a new ILO convention and in social clauses with enforcement mechanisms, for example tied to trade agreements.